AP®︎ Microeconomics: Topic 6.1 Practice Test
Prepare for your quiz, test, or the AP exam with focused practice questions on Topic 6.1 of AP Microeconomics – Socially Efficient and Inefficient Market Outcomes.
Questions List
Topic 6.1
Question 1 Easy
This question tests the following: POL-2.B.4
What does MSB stand for in economics?
What You’re Being Tested On:
Explore the learning objectives taken directly from the College Board’s AP® Microeconomics Curriculum. Ensure you’re prepared for the exact topics covered on the AP® exam, in-class tests, and quizzes, and gain confidence in your mastery of the material.
Topic 6.1: Socially Efficient and Inefficient Market Outcomes
Learning Objective: POL-2.B
Explain (using graphs where appropriate) how private incentives can lead to actions by rational agents that are socially undesirable (inefficient) market outcomes.
Essential Knowledge: POL-2.B.1
Rational agents can pursue private actions to exploit or exercise market characteristics known as market power.
Essential Knowledge: POL-2.B.2
Rational agents make optimal decisions by equating private marginal benefits and private marginal costs that can result in market inefficiencies.
Essential Knowledge: POL-2.B.3
Policymakers use cost-benefit analysis to evaluate different actions to reduce or eliminate market inefficiencies.
Essential Knowledge: POL-2.B.4
Market inefficiencies can be eliminated by designing policies that equate marginal social benefit with marginal social cost.
Learning Objective: POL-2.C
a. Explain equilibrium allocations in imperfect markets relative to efficient allocations (using graphs where appropriate) and why these markets are inefficient. b. Calculate (using graphs where appropriate) the deadweight loss resulting from the production of a non-efficient quantity.
Essential Knowledge: POL-2.C.1
Equilibrium allocations can deviate from efficient allocations due to situations such as monopoly; oligopoly; monopolistic competition; negative and positive externalities in production or consumption; asymmetric information; and insufficient production of public goods.
Essential Knowledge: POL-2.C.2
Producing any non-efficient quantity results in deadweight loss.
Learning Objective: POL-2.A
a. Define social efficiency. b. Explain (using graphs where appropriate) why resource allocation in perfectly competitive markets is socially efficient.
Essential Knowledge: POL-2.A.1
The optimal quantity of a good occurs where the marginal benefit of consuming the last unit equals the marginal cost of producing that last unit, thus maximizing total economic surplus.
Essential Knowledge: POL-2.A.2
The market equilibrium quantity is equal to the socially optimal quantity only when all social benefits and costs are internalized by individuals in the market. Total economic surplus is maximized at that quantity. [See also PRD-3 and POL-3.]
